Inter Parfums - WACC Analysis

Inter Parfums (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Inter Parfums's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Inter Parfums's investment risk. WACC Formula = Cost of Equity (CAPM) * Common Equity + (Cost of Debt) * Total Debt. The result of this calculation is an essential input for the discounted cash flow (DCF) analysis for Inter Parfums. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Inter Parfums before they make value investing decisions. This WACC analysis is used in Inter Parfums's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Inter Parfums's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for Inter Parfums uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Inter Parfums over the long term. If there are any short-term differences between the industry WACC and Inter Parfums's WACC (discount rate), then Inter Parfums is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of Inter Parfums's WACC or the risk free rate, because no investment can have a cost of capital that is better than risk free. This situation may occur if the beta is negative and Inter Parfums uses a significant proportion of equity capital.